This is page 2 of:

Macy’s: Adding Same-Day Delivery Would Cost Us Next To Nothing

August 15th, 2012

Hoguet probably really is surprised. Maybe she shouldn’t be. With a cheap project, ROI is easy, which means store managers can afford to experiment. Do they add hours for part-time associates who then have the flexibility to shift to filling orders when things are slow in the store? Do they put trainees on a pick-and-pack shift until they know the store better? Do they rotate all associates through the back room to see how it settles out best? With no high project cost to justify, there’s less urge to micromanage to get ROI, and everyone is happier.

And every in-store technology improvement can feed this effort. RFID tags can improve inventory accuracy, which means the fulfillment logic that picks a shipping store does a better job. The same RFID tags can simplify finding the correct size and style quickly, which is crucial for Macy’s because the items being shipped are often coming off the store’s racks. Because the RFID’s ROI is already assumed to come from replenishment improvements, store-to-door gets that virtually for free.

Is this all part of a big plan? Almost certainly not. Big plans quickly grow complex. This approach is all opportunistic. Anything can be added, if there’s no added cost.

So when an analyst asked Hoguet whether Macy’s is “poised” to start doing same-day delivery through store-to-door, her answer—that “if we decide it’s an important need for the customer, I think we’re going to be very well positioned to do so going forward”—was blown up in some quarters into an imminent challenge to Amazon’s and eBay’s same-day delivery programs.

Will it be? Maybe. But for Amazon and eBay, same-day delivery requires commitment to a lot of build-out to create local distribution centers—lots of CapEx, lots of ROI. For Macy’s, adding local delivery from any particular store just requires finding a local delivery service. If things don’t work out with the service, it’s easy to drop.

Likewise, if Macy’s decides it wants to expand store-to-door beyond 290 stores, it’s just a matter of adding associate hours at each store involved. If it turns out a store isn’t worth the trouble, it will just turn off the lights in that room in the back and re-adjust schedules.

There is, of course, an endpoint to this lightweight planning, low incremental cost approach. But Macy’s doesn’t know where that is—and doesn’t have to know where it is. Macy’s doesn’t need a big plan—just a stream of small, incremental ideas that cost almost nothing to add or shut down, built on top of local stores where the rent has already been paid.

After all the disadvantages that physical stores have faced in dealing with E-Commerce, for once it looks like all that expensive real estate is actually an advantage.


Comments are closed.


StorefrontBacktalk delivers the latest retail technology news & analysis. Join more than 60,000 retail IT leaders who subscribe to our free weekly email. Sign up today!

Most Recent Comments

Why Did Gonzales Hackers Like European Cards So Much Better?

I am still unclear about the core point here-- why higher value of European cards. Supply and demand, yes, makes sense. But the fact that the cards were chip and pin (EMV) should make them less valuable because that demonstrably reduces the ability to use them fraudulently. Did the author mean that the chip and pin cards could be used in a country where EMV is not implemented--the US--and this mis-match make it easier to us them since the issuing banks may not have as robust anti-fraud controls as non-EMV banks because they assumed EMV would do the fraud prevention for them Read more...
Two possible reasons that I can think of and have seen in the past - 1) Cards issued by European banks when used online cross border don't usually support AVS checks. So, when a European card is used with a billing address that's in the US, an ecom merchant wouldn't necessarily know that the shipping zip code doesn't match the billing code. 2) Also, in offline chip countries the card determines whether or not a transaction is approved, not the issuer. In my experience, European issuers haven't developed the same checks on authorization requests as US issuers. So, these cards might be more valuable because they are more likely to get approved. Read more...
A smart card slot in terminals doesn't mean there is a reader or that the reader is activated. Then, activated reader or not, the U.S. processors don't have apps certified or ready to load into those terminals to accept and process smart card transactions just yet. Don't get your card(t) before the terminal (horse). Read more...
The marketplace does speak. More fraud capacity translates to higher value for the stolen data. Because nearly 100% of all US transactions are authorized online in real time, we have less fraud regardless of whether the card is Magstripe only or chip and PIn. Hence, $10 prices for US cards vs $25 for the European counterparts. Read more...
@David True. The European cards have both an EMV chip AND a mag stripe. Europeans may generally use the chip for their transactions, but the insecure stripe remains vulnerable to skimming, whether it be from a false front on an ATM or a dishonest waiter with a handheld skimmer. If their stripe is skimmed, the track data can still be cloned and used fraudulently in the United States. If European banks only detect fraud from 9-5 GMT, that might explain why American criminals prefer them over American bank issued cards, who have fraud detection in place 24x7. Read more...

Our apologies. Due to legal and security copyright issues, we can't facilitate the printing of Premium Content. If you absolutely need a hard copy, please contact customer service.